Corruption even by foreign operations poses a legal risk for running global pharma companies. Pfizer recently found itself under U.S. probe in that line for its behavior overseas.
The New York pharma has received inquiries from the foreign corruption units at the U.S. Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) regarding its activities in China and Russia, the company said in its quarterly securities filing (PDF) last week.
The requests from the two agencies on China came recently in June and August, while the Russian ones arrived last year and have been disclosed in previous reports. “We are producing records pursuant to these requests,” the company said in the document.
Both probes fall under the Foreign Corrupt Practices Act (FCPA), which forbids U.S. firms and individuals from bribing foreign government officials to benefit their businesses.
Pfizer knows too well what that law means. In August 2012, the company agreed to pay over $60 million to settle charges by the DOJ and SEC for allegedly violating the FCPA. At the time, the company was accused of paying foreign officials to facilitate drug and formulary approvals, as well as increasing sales in eight countries including China and Russia.
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In China, for example, Pfizer invited “high-prescribing doctors” in the Chinese government system to fancy meetings that included recreational activities. Various point programs were created, under which government doctors could accumulate points to redeem gifts, according to the SEC’s complaint back then.
Pfizer’s not the only pharma company to have been targeted by the agencies under FCPA—and China and Russia have been frequently cited as crime scenes. In June, Novartis coughed up $347 million to wrap up years of FCPA investigations around its conduct in Greece, Vietnam, South Korea and China.
Alexion in July paid $21 million to resolve foreign corruption charges relating to how it tried to win favorable treatment for its Soliris in Turkey and Russia. In 2015, Bristol Myers Squibb shelled out $14 million to settle the SEC’s finding that its China sales reps reaped over $11 million in profits by bribing healthcare providers. There’s also the infamous GlaxoSmithKline China bribery case, which ended with a gigantic $490 million fine by Chinese authorities in 2014 and $20 million in a settlement by the SEC in 2016.